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The New International Trade Crossing: A means to boost Detroit-and-area employment at a critical time

(this article mostly derives from remarks to the International Union of Operating Engineers, at Gaylord, MI, Oct. 24, 2012, and to the Southwest Detroit Business Association, at the International Brotherhood of Electrical Engineers, June 13, 2013)

I’ve had the good fortune to represent Canada in Michigan since 2010. During these three exceptional years, no Michigan-Canada issue has been more important than reaching agreement to build the New International Trade Crossing (NITC).

In January 2011, your governor dedicated five minutes of his first state-of-the-state speech to talking about Michigan’s connections with Canada. The speech was remarkable; I’m pretty sure that no other U.S. governor has ever used such a high-profile occasion to remind his audience of how interconnected a jurisdiction – in this case, Michigan – is with Canada.

It’s about jobs …

The governor took that opportunity to endorse construction of a new bridge between Detroit and Windsor. He knows – as do workers and job creators across this state – that the majority of Michigan-Canada trade depends on one 84-year-old bridge to get to market. 44% of everything Michigan sells to the world is bought in Canada – more than by your state’s next 14-largest markets combined.

218,000 jobs in your state depend on trade with Canada – literally, on stuff moving to and from Canada, reliably and efficiently. Today, most of those goods cross the Ambassador Bridge.

We must not forget – this is about more than Michigan and Canada. Legislatures in Ohio, Indiana, Kentucky, even Alabama, have passed Resolutions calling for the NITC to proceed. Lawmakers in those states, and in others, know how vulnerable their trade with Canada is to the risk that one very old bridge, for which there’s no real redundancy, could at some point become horribly inefficient. Or even fail – whether due to old age, a catastrophic accident, or terrorism.

With that outcome, Michiganders effectively endorsed a transportation infrastructure project, the total investment in which, on both sides of the border, will approach $4 billion. Building it will create tens of thousands of construction and materials-supply jobs in our two countries during the 4-year construction period. Could there be a better time, in Detroit’s history, for such a major job-creating project to get underway?

The NITC will assure the security of the jobs of millions of workers employed in manufacturing and logistics in both countries. Certainty around the existence of reliable cross-border transportation infrastructure will make this region – both sides of the border – attractive to on-going investment that will result in many more jobs. Rarely has a single piece of infrastructure been more important.

In the medium-term, there will be many permanent jobs associated with operation of the crossing, and in businesses – existing and new – linked to border operations.

and communities …

The NITC, like all major infrastructure projects, will alter the local landscape. While the preliminary impact area has been identified, the exact boundaries could still change. Property owners in the impacted area will be notified officially when plans are finalized. Until that time, binding predictions of specific future land uses simply cannot be made. But governments have made clear their commitment: measures for necessary relocation will be fair and equitable.

The NITC will be jointly owned by the Government of Canada and the State of Michigan. As owners, Canada and Michigan are ultimately responsible for ensuring that appropriate steps are taken to enable the host communities in the Detroit and Windsor areas to benefit from the NITC project and to mitigate its negative impacts.

The Windsor-Detroit Bridge Authority will be responsible for the day-to-day operations of the bridge. The Authority will be required to undertake public outreach activities to ensure the host community is engaged throughout the procurement, construction and operations phases of the project. Such outreach activities will include, but may not be limited to:

Development of a public website where all project-related information, reports & materials can be found, and public feedback can be solicited;

Holding annual public meetings in both Detroit and Windsor to provide a forum for two-way dialogue that allows for public questions and comments;

Issuing an annual report to communicate its activities to stakeholders; and,

Formal periodic consultations with community stakeholders.

Canada and Michigan plan to pursue a public-private partnership (P3) for the new crossing. This arrangement would see the public sector enter into a contract with a private sector consortium to design, build, finance, operate and maintain the bridge under a long-term concession. At the end of the term, the consortium would transfer the bridge to the public sector. The underlying goal of all P3s is to combine the best capabilities of both public and private sectors for mutual benefit.

Through this contract, Canada and Michigan will ensure that the private sector satisfies the public interest through rigorous, built-in performance standards. The operator will be required to meet all applicable laws and regulations. In addition, the P3 contract will require that the operator establish and maintain mechanisms to understand and address community concerns.

In order to promote NITC community benefits in the context of an innovative P3 arrangement, evaluation criteria to benefit local communities will be included in the Request for Qualification (RFQ).

With respect to community benefits and community involvement, consortia will be asked to include the following as part of their proposals:

A plan as to how the community would be involved in the project’s operations during the construction and operations periods;

What types of community outreach the consortium would be undertaking to minimize detrimental impacts from vibration, noise, traffic routing, congestion relief, local road repair and rehabilitation, and so on; and,

A plan as to how the consortium would work with local community groups, institutions of higher learning, unions and others to maximize opportunities for local employment (e.g., training, apprenticeship programs and the like).

Bidders will be asked how they would reach out to the community, be a good neighbor, employ locally and so forth. The operator will be held to the highest performance standards to ensure that legitimate concerns of the communities are acknowledged and addressed.

We are confident project economics will dictate that local labor, supplies and suppliers be used to the maximum extent possible. Canada and Michigan will strongly encourage and reward the use of local resources, local supplies, and local job training initiatives (including apprenticeship programs) through the procurement process.

U.S. workers in the U.S.A. …

In case there’s doubt, work on the Michigan side can only be done by folks eligible to work in the USA. Canadians can’t come over and take those jobs. Just as Americans can’t come and take the jobs on the Canadian side.

It’s been estimated, in study after study, that more than 10,000 full time jobs – in the construction sector alone – will be created from this project, just in Michigan. Those will be good paying jobs.
And the spinoffs from the project will create another 13,000-or-more jobs. No single project in Michigan in the foreseeable future will generate nearly as much employment as this will.

Michigan has also negotiated an amazing arrangement with the U.S. Federal Highway Administration whereby the $550M that Canada will pay for the Interchange to I-75 – money that never flows into Michigan’s books – will be counted by US DoT as Michigan’s share in the four-to-one match program.

Meaning Canada’s $550 million will secure an additional $2.2 billion in federal funds for road and bridge construction anywhere in Michigan. No cost to the state – but a great benefit to Michigan workers! The Center for Automotive Research in Ann Arbor, in a 2012 study, projected that an additional 6,000 jobs will be created as a result. These funds will begin to flow after NITC construction has begun.

That agreement means this project becomes conditioned to federal matching requirements. One of those is the applicability of ‘Davis Bacon’ – meaning that ‘prevailing wages’ must be paid.

Here’s another gain for American labor and American business. Even though there’s zero U.S. (or MI) money in either the bridge span or the interchange, Canada agreed that those components will be constructed according to a new rule: Buy Canada/Buy US. We don’t know which companies will win contracts to provide steel and other content for the bridge. But we do know, as a result of this rule, that content will come from one or the other (or more likely both) of our two countries. Not from Brazil. Not from China. Not from anywhere else.

The Moroun ad campaign in support of Prop 6 left the impression the NITC would be made of Chinese steel. Like everything else in those ads, that wasn’t true. The U.S. Steelworkers Union enthusiastically endorsed the Buy U.S.-Buy Canada Agreement. They would not have supported this if there was even a chance the bridge would be made of anything other than U.S.-Canadian steel.

Going forward …

Several major necessary milestones have already been realized: the June 2012 Michigan/Canada Agreement; the overwhelming defeat of Proposition 6; the U.S. Presidential Permit this April 12.

Two milestones, and some irritants, remain. After defeat of their Proposition 6, the Morouns’ spokesman defiantly declared they would take their campaign “to the courts” and to “Washington, D.C.” The fact that the Presidential Permit was issued in the face of a Moroun lawsuit contesting the U.S. government’s authority to do so suggests the desperate actions of the Ambassador Bridge owners are now considered frivolous and totally without merit.

One lawsuit has already been dismissed (in July, by Ingham County Judge Joyce Draganchuk). Suits will probably continue; launching court actions is what these people do. But their lawsuits and stunts can no longer kill this project.

Concerning the two remaining milestones, the U.S. Coast Guard Permit should be a formality; after all, there will be no NITC footings in the water, and it will achieve the height clearances necessary for Detroit River shipping.

Funding for the U.S. Customs Plaza will have to be identified and committed before bids from private sector companies can be invited. We know that money is tight. Everywhere. But we also know the U.S. is a reliable partner – one that can be counted on to discharge its responsibilities. As already noted, the total cost for this project – including all of the road work on both sides of the border – approaches $4 billion. The Governments of Canada and Ontario are committed to pay for – or guarantee – approximately 95% of that sum. The state of Michigan bears no cost and no liability. Per the Crossing Agreement, the customs plaza on the U.S. side – at an approximate cost of $250 million – is clearly a U.S. federal government responsibility. Meeting in Minneapolis in July, the Council of State Government’s Midwestern Legislative Conference (representing eleven states) called on Washington to act quickly to fund the customs plaza, so that the project can get underway.

When our Prime Minister, Stephen Harper, spoke to the Council on Foreign Relations in New York City in May, he described Detroit-Windsor as the “largest single trade corridor in the world.” Meaning, it’s important to the U.S. and to Canada that we get things right at Detroit-Windsor.

That this project could soon proceed is testament to the resolve and the drive of many. Resolve and drive will still be required in the months ahead.

Between us, Americans and Canadians, Michiganders and Ontarians, are poised to achieve something really big. Something really important to the future of this entire region. Through the extraordinary partnership that we’ve built – together – we will grow our shared economy. We will create jobs – and new hope – for people across this region, on both sides of the border. including for the good people of Detroit. Those couldn’t come at a more important time.

Dr. Roy Norton has represented Canada in the U.S. mid-west since September 2010. He’s been especially active in building support for a new bridge connecting Detroit and Windsor – but has also been heavily engaged in promoting increased two-way trade and investment, managing border-related and Great Lakes issues, and in building greater awareness of the extent of economic integration (including in the energy sector) between the U.S. and Canada. His two previous foreign assignments for the Government of Canada have been at the Canadian Embassy in Washington, D.C.